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Horizontal/Vertical Integration

Horizontal Integration:- Acquiring or Merging with an industrial competitor to achieve a Competitive Advantage. 

  • Acquisition :- When a company pools its capital resources such as, debt; stock or cash; to purchase another company.
  • Merger :-  When two companies decide to pool their operations to create a new entity.  
  Vertical Integration :-  When a company integrates either Backward into an industry that produces inputs for the company's products, or; integrates Forward into an industry that uses or distributes the products.
  • Backward Integration:- Integrating with suppliers of, say, raw materials.
  • Forward integration:- Integration with sellers/distributors or finished goods.
Ex:- IBM has been a traditionally VERTICALLY Integrated company.
  • Backward:- integrated into disk drives that was to be used in its systems 
  • Forward:- integrated into computer consulting services,
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